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Acosta v. Arlett

United States District Court, District of Columbia

August 2, 2018

R. ALEXANDER ACOSTA, U.S. Secretary of Labor, Plaintiff,
v.
RANDALL ARLETT, et al. Defendants.

          MEMORANDUM OPINION RE DOCUMENT NO. 12

          RUDOLPH CONTRERAS UNITED STATES DISTRICT JUDGE.

         Granting Plaintiff's Motion for Default Judgment

         I. INTRODUCTION

         Plaintiff Alexander Acosta, the United States Secretary of Labor, filed suit against Defendants Randall Arlett; American Hospital Management Company, LLC (“AHM”); and American Hospital Management Company 401(k) Profit Sharing Plan (the “Plan”)[1] for failure to remit employee participant contributions to the Plan and for remitting certain contributions late, in violation of multiple provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”). See Compl., ECF No. 1. Defendants have failed to respond to this action. Now before the Court is Secretary Acosta's motion for default judgment, which asks the Court to enter judgment for $128, 317.96 in damages and requests various equitable remedies. See id. ¶¶ 6-8; Pl.'s Mem. Supp. Mot. Def. J. (“Pl.'s Mem”) at 8-12, ECF No. 12-2. For the reasons set forth below, the Court grants Secretary Acosta's motion.

         II. FACTUAL BACKGROUND

         Mr. Arlett and AHM are fiduciaries of the Plan as those terms are defined under ERISA. See Compl. ¶¶ 6-7 (citing 29 U.S.C. § 1002(21)). Mr. Arlett and AHM established the Plan to provide retirement benefits to AHM's participating employees. See Declaration of William Jurgovan (“Jurgovan Decl.”) ¶ 3, Ex. A, ECF No. 12-2. The Plan allowed participants to contribute a portion of their pay to the Plan as elective salary deferrals, or employee contributions, through payroll deductions. Compl. ¶ 9.

         On December 29, 2017, Secretary Acosta filed suit alleging that Defendants had failed to remit employee contributions and had remitted certain contributions late without interest from September 2012 to September 2015. Id. ¶ 10. Secretary Acosta also alleges that, since April 2016, Defendants have neglected their fiduciary duty to administer the Plan and its assets, failed to respond to requests of former employees to distribute the Plan's assets, and failed to make reasonable efforts to remedy their fiduciary breaches. Id. ¶¶ 13-18. Secretary Acosta asks the Court to award damages in the amount of $128, 317.96 for unremitted contributions and interest owed on unpaid and late contributions. Id. ¶ 21; Pl.'s Mem. At 2. He also seeks various equitable remedies. Compl. ¶ 21.

         Secretary Acosta served all Defendants with the complaint and summons, but neither Defendant responded or otherwise defended this action. See Return of Service, ECF No. 4, 8. Accordingly, Secretary Acosta asked the Clerk of Court to enter default against all Defendants. See Request to Enter Default on Def. Arlett, ECF No. 5.; Request to Enter Default on Defs. AHM and the Plan, ECF No. 9. The Clerk of Court entered default against all Defendants, and Secretary Acosta now moves for default judgment. See Arlett Default, ECF No. 7; AHM & Plan Default, ECF No. 10; Pl.'s Mot. Default J., ECF No. 12. The Court now addresses Secretary Acosta's motion and concludes that he is entitled to a monetary judgment of $128, 317.96 and to most of his requests for equitable relief.

         III. LEGAL STANDARD

         While courts prefer to resolve disputes on their merits, a default judgment is appropriate when the adversarial process has been effectively halted by a party's failure to respond. Jackson v. Beech, 636 F.2d 831, 836 (D.C. Cir. 1980). Federal Rule of Civil Procedure 55 sets forth a two-step process for the entry of a default judgment. First, the clerk of the court must enter default. See Fed. R. Civ. P. 55(b)(2). Following the clerk's entry of default, the plaintiff may move for a default judgment. Id. When ruling on such a motion, a defendant's liability for the well-pleaded allegations of the complaint is established by the default. See Adkins v. Teseo, 180 F.Supp.2d 15, 17 (D.D.C. 2001). Default does not, however, establish the amount of damages owed. See Id. Instead, the court must ascertain the sum to be awarded, which may be based on the plaintiff's affidavits and other documentary evidence. See Nat'l Shopmen Pension Fund v. Russell, 283 F.R.D. 16, 19-20 (D.D.C. 2012). A court has “considerable latitude in determining the amount of damages.” Ventura v. L.A. Howard Constr. Co., 134 F.Supp.3d 99, 103 (D.D.C. 2015). In ERISA actions involving delinquent employee contributions, plaintiffs may recover damages for: (1) the unpaid contributions, see 29 U.S.C. § 1132(g)(2)(A); (2) interest on those unpaid contributions, id. § 1132(g)(2)(B); (3) an amount equal to the greater of (i) interest on the unpaid contributions or (ii) liquidated damages provided for under the plan, which must not exceed 20 percent of the unpaid contributions, id. § 1132(g)(2)(C); (4) reasonable attorneys' fees and costs, id. § 1132(g)(2)(D); and (5) other legal or equitable relief the court deems appropriate, id. § 1132(g)(2)(E).

         IV. ANALYSIS

         A. Liability

         The Court first addresses Defendants' liability in the present action. Secretary Acosta filed his complaint on December 29, 2017. See Compl., ECF No. 1. He then served Mr. Arlett on February 10, 2018, and served AHM and the Plan on March 9, 2018. See Return of Service, ECF Nos. 4, 8. On March 12, 2018, Secretary Acosta requested an entry of default on Mr. Arlett on the ground that he had not timely filed an answer to the complaint. See Request to Enter Default on Def. Arlett, ECF No. 5. The Clerk of Court thereby entered the default on March 13, 2018. See Arlett Default, ECF No. 7. Secretary Acosta subsequently requested a default entry on both AHM and the Plan on the same grounds, see Request to Enter Default on Defs. AHM and the Plan, ECF No. 9, and the Clerk of Court entered the default on April 6, 2018. See AHM & Plan Default, ECF No. 10. On June 8, 2018, Secretary Acosta moved for default judgment, and sent Defendants copies of the motion by first class mail. See Pl.'s Mot. Default J., ECF No. 12; Certificate of Service, ECF No. 12-3. To date, Defendants have not filed an answer, moved to vacate the default entries, opposed the motion, or otherwise defended this action.

         Defendants are liable for the well-pleaded allegations in Secretary Acosta's complaint because the Clerk has entered default. See Flynn v. Mastro Masonry Contractors, 237 F.Supp.2d 66, 69 (D.D.C. 2002) (asserting that default entry establishes liability for every well-pleaded allegation in the complaint). “ERISA requires that ‘[e]very employer who is obligated to make contributions to a multiemployer plan . . . make such contributions in accordance with the terms and conditions of such plan or such agreement.'” Flynn v. Extreme Granite, Inc., 671 F.Supp.2d 157, 161 (D.D.C. 2009) (quoting 29 U.S.C. § 1145) (alteration in original). Secretary Acosta alleges that Mr. Arlett and AHM breached their fiduciary duties because they “deducted money from the participants' pay as employee contributions to the Plan, ” but “failed to remit those contributions to the Plan, ” and remitted certain contributions late without interest. Compl. ¶ 10. Further, Secretary Acosta contends that, despite a former employee's requests ...


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